Aipedia: Mortgage brokers

FCA rules on AI for mortgage brokers

Aipedia, by the Apex broking team · Last reviewed 2026-10-27

There are no AI-specific FCA rules for mortgage brokers; existing rules apply, and FS25/6 expects qualified advisers to stay in charge of AI-assisted recommendations. Brokers who understand the published material can show the FCA, the Ombudsman and their PI insurer how they control AI.

Part of: AI in Mortgage brokers

In short

The FCA regulates AI use by mortgage brokers through its existing rules rather than new ones. FS25/6 (December 2025) is the most mortgage-specific statement: respondents wanted AI to support advisers, with qualified people reviewing and signing off AI-based recommendations, and the FCA said the Consumer Duty and SM&CR already manage many risks. PS25/11 (July 2025) relaxed some mortgage rules but says nothing about AI. The FCA's 2026 good practice review stresses accountability for outsourced AI and auditable records. Any disclosure consultation for digital journeys is expected in 2027.

The FCA's overall position

The FCA treats AI as a way of doing regulated work, not as a separate activity. Its "AI and the FCA: our approach" page (8 September 2025, updated 2 October 2026) states: "We do not plan to introduce extra regulations for AI." The approach is principles-based and outcomes-focused. For a mortgage broker, that means the same MCOB, PRIN, SYSC and SM&CR obligations apply whether a recommendation was researched by an adviser, a sourcing system or a generative AI model.

What each publication says

Publication	Date	Status	Key points for brokers
FS25/6 Mortgage Rule Review feedback and roadmap	December 2025	Feedback and roadmap, not rules	AI should improve advice, not replace advisers; human judgement essential in complex cases; calls for adviser sign-off of AI recommendations; Consumer Duty and SM&CR already manage many risks
PS25/11	Published and in force 22 July 2025	Binding rule changes	Easier to discuss options without full advice, remortgage with a new lender and reduce terms; no AI content
FCA AI Update	22 April 2024	Explanation of existing rules	Maps AI to Principles 2, 3, 6, 7, 8 and 9, PRIN 2A, SYSC 4, 7, 8 and 15A, SM&CR, DISP 1 and FG22/5
AI in financial services: good practice	19 October 2026	Good practice, no new requirements	Firms remain responsible for outcomes and outsourced AI; map AI to senior managers; keep auditable decision records; test outcomes across customer groups; offer non-AI routes
Mills Review	6 July 2026	Recommendations to the FCA Board	Seven recommendations on AI in retail financial services, including the perimeter, autonomous models, agentic finance and AI Lab expansion

FS25/6 in more detail

FS25/6 summarises feedback to DP25/2 and sets the roadmap for the Mortgage Rule Review. On AI, the points that matter most to brokers are:

Human judgement: respondents agreed it "remains essential, especially in complex cases" (paras 4.22 to 4.23).
Accountability and accuracy: respondents flagged accountability gaps and the risk that AI could "hallucinate or produce incomplete data", and asked for qualified advisers to review and sign off AI-based recommendations (4.24 to 4.26).
Existing rules: the FCA said the Consumer Duty and SM&CR "can already manage many of the risks" (4.25).
The adviser's future role: intermediaries may become interpreters or validators of AI outputs, or give a final recommendation from an AI-generated shortlist (4.27).
Vulnerability: digital exclusion and older borrowers were flagged as risks (4.26, 6.11). See AI in later-life lending.
Disclosure: changes to disclosure and financial promotion rules to support digital journeys will be explored, with any consultation expected in 2027 (4.12 to 4.14). See telling borrowers you use AI.
Innovation support: the FCA cites its AI Lab, a Supercharged Sandbox with a mortgage use case, and AI Live Testing (4.5), with AI Lab cohorts opening in 2026 (4.6).

PS25/11 and automated journeys

PS25/11 contains no AI content, but its changes make execution-only and lighter-touch journeys more practical, for example discussing options without full advice and remortgaging with a new lender. Those journeys are the ones most likely to be automated. A broker building an automated retention or remortgage process still needs it to meet the Consumer Duty, and the 2026 review flags "inflexible automated journeys" as an area for improvement. See AI for product transfers.

Other material to watch

The Treasury Committee report "Artificial intelligence in financial services" (HC 684, 20 January 2026) reportedly asked the FCA for practical AI guidance by the end of 2026, including on accountability for AI harm; responses were published in April 2026. The Financial Ombudsman Service told the Mills Review it sees very few complaints about firms' use of AI but wants a clear rationale for how AI contributed to an outcome. Further FCA work on holistic advice and AI is also on the roadmap.

What it means in practice

Name a senior manager responsible for AI use and record it in your SM&CR documents.
Keep an inventory of AI and automated tools, including those built into sourcing and CRM platforms. Under SYSC 8.1.6R you remain fully responsible for outsourced functions.
Make sure a qualified adviser reviews every AI-assisted recommendation before it reaches the borrower.
Keep records that show what the tool produced and what the adviser decided, consistent with SYSC 9.1.1R.
Test outcomes for different customer groups and keep a non-AI route for borrowers who need it.
Check controls tool by tool, starting with sourcing and criteria and recommendation letters.

What it means for PI

The FCA has said nothing specific about AI and PI. MIPRU 3.2 still requires mortgage intermediaries to hold PI with minimum terms, including cover for appointed representatives' conduct, defence costs and Ombudsman awards. Insurers may ask how AI is governed, and FS25/6's emphasis on adviser sign-off is a useful benchmark for answering. The full PI rules are explained on FCA PI requirements for mortgage brokers, and the AI question is covered in does broker PI cover AI mistakes. Return to the mortgage broker AI hub for other guides.

Apex arranges PI for mortgage brokers and can review how your wording and proposal answers reflect the AI governance described above.

Sources

Frequently asked

Is FS25/6 a set of new rules?

No. FS25/6 is a feedback statement and roadmap. It records what respondents said about AI and sets out the FCA's next steps. The binding obligations remain the existing Handbook rules, such as the Consumer Duty, the conduct rules and the MCOB advice rules.

Must an adviser sign off every AI recommendation?

There is no specific rule saying so. Respondents to DP25/2 asked for qualified advisers to review and sign off AI-based recommendations, and the conduct rules and suitability requirements make adviser review the safest approach in practice.

Will brokers have to disclose AI use?

There is no current FCA rule requiring brokers to disclose AI use as such. FS25/6 says disclosure and financial promotion changes for digital journeys will be explored, with any consultation expected in 2027. Data protection law already requires transparency about some processing.

Does the October 2026 good practice review apply to brokers?

It covers financial services firms generally rather than mortgage brokers specifically, and it does not create new requirements. Its themes, such as accountability for outsourced AI, auditable records and non-AI routes for vulnerable customers, are a useful checklist for any broker.

Check your PI covers how you use AI

Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.